The Conversation | 3 July 2014

Getting more bang... cuttingGetting more bang for public bucks: is the ‘efficiency dividend’ efficient?

Research director of CPD’s Public Service Research Program Chris Stone recently contributed an article to The Conversation which questioned the effectiveness of the ‘efficiency dividend’ mechanism for promoting better value from public services. In this article, he analyses and seeks to clarify some of the ideas underpinning its use.

Introduced by Bob Hawke’s ALP government in 1987, the ‘efficiency dividend’ has the stated aim of dictating an ideal rate of return from government departments, in terms of service delivery outputs against resource inputs, although this article in line with various recent commentary, characterises it as a ‘blunt instrument’.

The mechanism has nonetheless continued to be a prominent factor for successive governments including the current one:

The efficiency dividend is the most significant initiative in May’s budget for driving more efficient government operations.

Chris argues that proponents of the dividend need to include other important and widely-accepted definitions of efficiency above and beyond ‘technical’ efficiency (which is achieved simply when ‘the same results are obtained from fewer resources’).


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